As you may recall, I’ve written a couple posts about Myanmar (or Burma) in the past, though mostly in the context of tourism. I’d like to switch gears a bit this time and write about another new opportunity for the country: a stock market.
Myanmar’s legislative body, the Union Solidarity and Development Party, recently approved a plan for a new stock exchange that will be set up by the Central Bank with the help of the Tokyo Stock Exchange and Daiwa Securities. Ideally the exchange will be set up and have 22 companies trading by 2015.
Now, I’ve written a bit about the benefits and hazards of opening a stock exchange (you may remember my posts on the Cambodian Securities Exchange, which opened without any stocks and only recently had its first IPO), but I’ll refresh your memory here. Opening a stock market signals that a country has entered a new phase of economic development, which can draw much-needed foreign investment. A stock market also opens a new venue for savings and investment, making it a valuable tool to encourage economic growth and development. Myanmar’s government is certainly hoping that the stock exchange will help the country modernize and catch up to its Asian tiger neighbors. As one official points out, the time difference between Myanmar’s biggest city, Yangon, and Singapore is 1 1/2 hours, but in terms of economic development they are 30 years apart. Corruption and poverty are major problems for the country, and this exchange is part of President Thein Sein’s attempt to introduce some economic reforms and regulations that will move the country towards a mixed economic system. Unfortunately, it is possible that many smaller, local businesses will suffer with the introduction of public companies.
Because of Myanmar’s fairly unique political situation, and the accompanying plagues of poverty and corruption, some are worried that the stock exchange is not actually a step forward in terms of economic growth, but rather another way for the small portion of wealthy citizens to increase their own coffers. Myanmar is rich in natural resources, but harsh western sanctions have prevented the country from capitalizing on these resources. Some have suggested that the stock exchange is simply a ploy to encourage western nations to drop or ease their sanctions, thus allowing those in control of the resources and of businesses to make a quick profit. President Thein Sein could conceivably be promising democratic reforms in order to bring in western investment only to flake on them once money has begun to flow into the country. Increased business opportunities as a result of western investment could also, however, create a large number of jobs, something the country sorely needs, and many western businesses are chomping at the bit to get into this newly opened country.
Aung San Suu Kyi has been warning western investors and Burmese citizens alike to be cautious about opening up Myanmar. She fears that many investors are being overly optimistic about Myanmars prospects, and during her Nobel Peace Prize lecture she chastized the excesses of western businessmen. High youth unemployment is another issue she worries about, as well as what this potential economic boom will mean 5 to 10 years down the road: will investors stick around for the long haul, or make a quick profit and leave? Her pesimissim has done little to quell the excitment surrounding Myanmar at the moment, however. Prices are already rising in the country in anticipation of the boom that most believe is coming, and soon.